Myer is about to roll out a radical new store format. Picture: Sergio DionisioSource:Supplied

MYER is about to give new meaning to the term “never pay retail”.

The department store chain has unveiled plans to roll out a radical new store format it’s been quietly trialling in Frankston, a suburb in Melbourne’s south.

With big bargains on offer year-round, the store has devoted an entire floor to heavily discounted stock from brands like Calvin Klein, Jack Jones, French Connection, Bardot and Levis.

Clearance prices at the Frankston store have been advertised as $50 and under for footwear, $34 and under for womenswear, $60 and under for home, $30 and under for menswear and $10 and under for children’s wear.

It’s been a hit with shoppers, and the retailer is rolling out the model at Penrith and Roselands in Sydney, Pacific Fair on the Gold Coast, Logan in Brisbane, Knox in Melbourne, Tea Tree Plaza in Adelaide and Perth City.

Discounted stock from brands including Guess, Nautica, Alannah Hill, Steve Madden and Dangerfield is now available at these stores.

Expect sales like this all year round on Myer’s discount floors. Picture: FacebookSource:Facebook

And it helps address Myer’s need to reduce its underperforming floor space while helping clear the way for new season stock, chief executive Richard Umbers said while briefing investors on the company’s 2017 financial year results on Thursday morning.

“We’ve always had clearance sales; this is about aggregating them to one location within a store, one clearance floor within an existing store — and it’s getting a great response,” he said.

The Frankston trial, which began in April, led to a 31 per cent increase in customers who were not Myer One members, with a 40 per cent increase in shoppers aged between 18 and 24-years-old, Mr Umbers said.

He noted the global trend towards “off-price” retailing, as shoppers flock to snap up big-name brands at bargain basement prices at clearance sales.

And he was at pains to emphasise that Myer would not be going down the path of “an ever-deepening cycle of whole store discounting” that could be a “journey of no return” in the tough retail climate.

Myer will continue to run its usual strategy in the rest of the store, and in its existing format stores, with high-to-low promotional markdowns on offer for a limited time.

The strategy was “supported by a network of premium and flagship stores, and as much as anything it is about lifting the standards in our premium and flagship stores as it is about creating the new format, they both work together,’’ Mr Umbers told The Australian.

As those stores are transformed into “experiential retail” environments, with drawcards like hipster barber salons, gourmet cafes and pop-up ice rinks, “clearance” signs will be moved out of more high-end stores like those in the centre of major capital cities.

“It doesn’t mean we’re not going to have a stocktake sale [at those stores],” Mr Umbers said, explaining that such sales would be “narrow and deep rather than whole of store”.

“Really, we need to drive a sustainable and profitable model for the long term.”

The company had been faced with the prospect of having to “exit or find a use” for 20 per cent of its store footprint, he said, meaning the discount floor approach was an “obvious” path to take “given the journey we’re on”.

The Frankston trial had shown that such an approach could be profitable, chief financial officer Grant Devonport said.

Myer clearance floors would not be a “down-market offer”, Mr Umbers told the Australian.

“It is still a quality retail offer so it is still merchandise with mannequins and the product is properly presented; it is not a junk shop,” he said.

Myer also announced plans to close a further three stores, saying it will not renew leases at Colonnades in South Australia, Belconnen in the ACT, and Hornsby in Sydney’s north — after three stores were closed at Brookside in Brisbane, and Orange and Wollongong in NSW. It is also about to complete a “space hand back” to landlords at Castle Hill and Blacktown.

A portion of the revue lost from these stores was being transferred to other stores or online, Mr Umbers said, adding: “We are pretty comfortable about the size of the sales transfer we are seeing.”

The latest store closure news comes as Myer struggles to turn around sluggish sales amid weak consumer spending and growing industry competition. It announced a 1.9 per cent drop in underlying profit to $67.9 million and a 2.67 per cent fall in total sales to $3.2 billion for the 2017 financial year.

Myer’s statutory net profit for the year to July 29 of $11.94 million, was down 80.3 per cent on the previous 53-week year, hit by $13.9 million in costs and significant items of $42.1 million.

Sales were impacted by the store closures, the write-off in the value of its 20 per cent stake in Topshop’s Australian franchisee and the impairment in the value of its struggling Sass & Bide brand.

Myer has now closed or announced the closure of 74,670 square metres of store space since the launch of its turnaround strategy New Myer in September 2015.

The retailer said it sales would continue to be negatively impacted by new entrants to the market, existing competitors, changes to consumer demographics and increased online competition.

On the plus side, Mr Umbers said, Myer’s online sales were increasing after improvements to its website and more sophisticated “trigger marketing” based on shopper data gleaned through its loyalty program.

A “strong uptake” of Afterpay, and the Katy Perry partnership were helping create an “engaged and differentiated offer” for young shoppers, he said, while the new Myer One app had marked one million downloads.

Data was also being used to ensure the right product mix, clothing sizes and colours in each different store, based on past sales records.

“The company has strong foundations from which to build and we look forward to continuing to shift the business towards a more effective, innovative and experiential retail model, which is engaging and relevant to our customers,” Mr Umbers said.